Question 1

Which of the following would not be a GAAP or managerial accounting reason for allocating joint costs?

Accepted Answer

A) to calculate cost of goods sold 
B) to analyze the profitability of various products 
C) for reimbursement of costs under a federal contract 
D) to evaluate the performance of division managers 
A) to calculate cost of goods sold 
B) to analyze the profitability of various products 
C) for reimbursement of costs under a federal contract 
D) to evaluate the performance of division managers

Question 2

Which of the following statements is true of the methods for allocating joint costs?

Accepted Answer

A) The net realizable value method uses the sales value of the units sold during the accounting period to allocate joint costs. 
B) The sales value at split-off method always results in the same gross-margin percentage for all products. 
C) The sales value at split-off method allocates joint costs to each product in proportion to the sales value of total production. 
D) The net realizable value method results in the same joint production cost per unit for all products. 
A) The net realizable value method uses the sales value of the units sold during the accounting period to allocate joint costs. 
B) The sales value at split-off method always results in the same gross-margin percentage for all products. 
C) The sales value at split-off method allocates joint costs to each product in proportion to the sales value of total production. 
D) The net realizable value method results in the same joint production cost per unit for all products.

Question 3

Chem Manufacturing Company processes direct materials up to the split-off point where two products (X and Y)are obtained and sold.The following information was collected for the month of November:

The cost of purchasing 10,200 gallons of direct materials and processing it up to the split-off point to yield a total of 9500 gallons of good products was $1,050,000.
The beginning inventories totaled 35 gallons for X and 400 gallons for Y.Ending inventory amounts reflected 565 gallons of Product X and 1,515,000 gallons of Product Y.October costs per unit were the same as November.
Using the physical-volume method,what is Product X's approximate gross-margin percentage? (Round all intermediary calculations two decimal places. )

Accepted Answer

A) 63% 
B) 56% 
C) 171% 
D) 68% 
A) 63% 
B) 56% 
C) 171% 
D) 68%

Question 4

Which if the following is a negative consequence of recording byproducts in the accounting records when the sale occurs?

Accepted Answer

A) the revenue from the byproducts is usually fairly large and the accounting records will be distorted 
B) earnings cannot be timed under this method 
C) managers can be tempted to stockpile byproducts 
D) it involves complex calculations compared to the production method 
A) the revenue from the byproducts is usually fairly large and the accounting records will be distorted 
B) earnings cannot be timed under this method 
C) managers can be tempted to stockpile byproducts 
D) it involves complex calculations compared to the production method

Question 5

The constant gross-margin percentage NRV method of joint cost allocation ________.

Accepted Answer

A) involves allocating costs in such a way that maintaining the same gross margin percentage for each product that was obtained in prior years 
B) computes gross margin before allocating the costs to the products 
C) is the same as the estimated NRV method 
D) is the same as the sales-value at split-off method 
A) involves allocating costs in such a way that maintaining the same gross margin percentage for each product that was obtained in prior years 
B) computes gross margin before allocating the costs to the products 
C) is the same as the estimated NRV method 
D) is the same as the sales-value at split-off method

Question 6

The net realizable value (NRV)method allocates joint costs to joint products produced during the accounting period on the basis of their relative NRV-final sales value plus separable costs.

Accepted Answer

A) True 
 B)False

Question 7

The Alfarm Corporation processes raw milk up to the split-off point where two products,cream and liquid skim,are produced and sold.There was no beginning inventory.The following material was collected for the month of February:
 
The cost of purchasing 780,000 gallons of direct materials and processing it up to the split-off point to yield a total of 758,500 gallons of good product was $2,310,000.When using a physical-volume measure,what is the approximate amount of joint costs that will be allocated to cream and liquid skim? (Round intermediary percentages to the nearest hundredth. )

Accepted Answer

A) $1,350,657 and $959,343 
B) $1,155,000 and $1,155,000 
C) $1,345,524 and $964,476 
D) $1,313,442 and $996,558 
A) $1,350,657 and $959,343 
B) $1,155,000 and $1,155,000 
C) $1,345,524 and $964,476 
D) $1,313,442 and $996,558

Question 8

In joint costing,the sales value at split-off method is typically used in preference to the NRV method only when net realizable value for one or more products at split-off do not exist.

Accepted Answer

A) True 
 B)False

Question 9

Physical measures such as weight or volume are the best indicators of the benefits received for allocating joint costs.

Accepted Answer

A) True 
 B)False

Question 10

The Kenton Company processes unprocessed milk to produce two products,Butter Cream and Condensed Milk.The following information was collected for the month of June:

The cost of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 27,500 gallons of saleable product was $53,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.What is the allocated joint costs of Butter Cream? (Round intermediary percentages to the nearest hundredth. )

Accepted Answer

A) $33,580 
B) $13,000 
C) $35,600 
D) $19,428 
A) $33,580 
B) $13,000 
C) $35,600 
D) $19,428

Question 11

For each of the following methods of allocating joint costs,give a positive or a negative aspect of selecting each one to allocate joint costs.
a.sales value at split-off
b.estimated net realizable value method
c.the constant gross margin method
d.a physical measure such as volume

Accepted Answer

a.Positive: Costs are allocated to produ

Question 12

Which of the following is not true of the joint allocation methods?

Accepted Answer

A) the sales value at the split-off method is the best measure of benefits received 
B) when selling prices of all products at the split-off are unavailable,the NRV method is the best alternative 
C) the constant gross-margin percentage NRV method treats the joint products as though they comprise a single product 
D) when selling prices are at the split-off point are available but further processing is necessary,the NRV method is the preferred allocation method 
A) the sales value at the split-off method is the best measure of benefits received 
B) when selling prices of all products at the split-off are unavailable,the NRV method is the best alternative 
C) the constant gross-margin percentage NRV method treats the joint products as though they comprise a single product 
D) when selling prices are at the split-off point are available but further processing is necessary,the NRV method is the preferred allocation method

Question 13

How does the physical-measure method allocate joint costs?

Accepted Answer

A) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage 
B) allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point 
C) allocates joint costs to joint products on the basis of the relative sales value at the split-off point 
D) allocates joint costs to joint products on the basis of relative NRV 
A) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage 
B) allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point 
C) allocates joint costs to joint products on the basis of the relative sales value at the split-off point 
D) allocates joint costs to joint products on the basis of relative NRV

Question 14

The only allowable method of joint cost allocation is net realizable value which is specified by FASB.

Accepted Answer

A) True 
 B)False

Question 15

In joint costing,which method assumes that all the markup is attributable to the joint process costs?

Accepted Answer

A) sales value at split-off method 
B) NRV method 
C) constant gross-margin percentage method 
D) physical measures method 
A) sales value at split-off method 
B) NRV method 
C) constant gross-margin percentage method 
D) physical measures method

Question 16

Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?

Accepted Answer

A) a physical measure such as volume is difficult to estimate than sales value 
B) physical volume usually has little relationship to the revenue producing power of products 
C) a physical measure usually results in less costs being allocated to the product that weighs the most 
D) customers will easily understand that the products are overpriced 
A) a physical measure such as volume is difficult to estimate than sales value 
B) physical volume usually has little relationship to the revenue producing power of products 
C) a physical measure usually results in less costs being allocated to the product that weighs the most 
D) customers will easily understand that the products are overpriced

Question 17

Byproducts are recognized in the general ledger either at the time production is completed or at the time of sale.

Accepted Answer

A) True 
 B)False

Question 18

Define the terms main product,joint product,and byproduct.Give at least one example of each type of product.

Accepted Answer

Main product - When one product has a hi

Question 19

All separable costs in joint-cost allocations are always incremental costs.

Accepted Answer

A) True 
 B)False

Question 20

In joint costing,outputs with no sales value are always excluded when costs are allocated using physical measures.

Accepted Answer

A) True 
 B)False

Which of the following would not be a GAAP or managerial accounting reason for allocating joint costs?

Which of the following statements is true of the methods for allocating joint costs?

Which if the following is a negative consequence of recording byproducts in the accounting records when the sale occurs?

The constant gross-margin percentage NRV method of joint cost allocation ________.

The net realizable value (NRV)method allocates joint costs to joint products produced during the accounting period on the basis of their relative NRV-final sales value plus separable costs.

In joint costing,the sales value at split-off method is typically used in preference to the NRV method only when net realizable value for one or more products at split-off do not exist.

Physical measures such as weight or volume are the best indicators of the benefits received for allocating joint costs.

For each of the following methods of allocating joint costs,give a positive or a negative aspect of selecting each one to allocate joint costs. a.sales value at split-off b.estimated net realizable value method c.the constant gross margin method d.a physical measure such as volume

Which of the following is not true of the joint allocation methods?

How does the physical-measure method allocate joint costs?

The only allowable method of joint cost allocation is net realizable value which is specified by FASB.

In joint costing,which method assumes that all the markup is attributable to the joint process costs?

Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?

Byproducts are recognized in the general ledger either at the time production is completed or at the time of sale.

Define the terms main product,joint product,and byproduct.Give at least one example of each type of product.

All separable costs in joint-cost allocations are always incremental costs.

In joint costing,outputs with no sales value are always excluded when costs are allocated using physical measures.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 16: Cost Allocation: Joint Products and Byproducts

Which of the following would not be a GAAP or managerial accounting reason for allocating joint costs?

Which of the following statements is true of the methods for allocating joint costs?

Which if the following is a negative consequence of recording byproducts in the accounting records when the sale occurs?

The constant gross-margin percentage NRV method of joint cost allocation ________.

The net realizable value (NRV)method allocates joint costs to joint products produced during the accounting period on the basis of their relative NRV-final sales value plus separable costs.

In joint costing,the sales value at split-off method is typically used in preference to the NRV method only when net realizable value for one or more products at split-off do not exist.

Physical measures such as weight or volume are the best indicators of the benefits received for allocating joint costs.

For each of the following methods of allocating joint costs,give a positive or a negative aspect of selecting each one to allocate joint costs. a.sales value at split-off b.estimated net realizable value method c.the constant gross margin method d.a physical measure such as volume

Which of the following is not true of the joint allocation methods?

How does the physical-measure method allocate joint costs?

The only allowable method of joint cost allocation is net realizable value which is specified by FASB.

In joint costing,which method assumes that all the markup is attributable to the joint process costs?

Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?

Byproducts are recognized in the general ledger either at the time production is completed or at the time of sale.

Define the terms main product,joint product,and byproduct.Give at least one example of each type of product.

All separable costs in joint-cost allocations are always incremental costs.

In joint costing,outputs with no sales value are always excluded when costs are allocated using physical measures.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters